JULY 1, 2019
Europeans have typically spent less time in front of the TV than their North American counterparts. That’s changing thanks to the popularity of over-the-top (OTT).
In 2017, Europeans watched two hours more of on-demand content per month compared to the previous year and nonlinear video viewership grew by 21% year-over-year.
With so many Europeans watching so much online TV, many international media companies are entering the region and several European broadcasters are starting to pour resources into OTT.
Secrets Of OTT Success
To achieve success, these companies will first need to understand three trends shaping this market.
First, to help capture more viewers, many European content providers are opting to work together to launch joint OTT services.
Netflix is less dominant in Europe than in the U.S. – most countries in Europe can access only half of Netflix’s U.S. catalog. This provides an enormous opportunity for content providers to enter the world of OTT without signing away ownership of their content to another service like Netflix.
The 2019 Netflix Film and Television Rate Report Series includes findings for three separate licensing agreements between Netflix and a U.S. studio for streaming rights in Canada, the U.K, and the U.S. [Learn More]
In France, there is Salto, a joint venture of three different French broadcasting services. In Spain, Loves TV is a collaboration between several different Spanish content providers. By combining their libraries, broadcasters that are supposed competitors can work together to dominate the growing market.
Second, European broadcasters will need to invest in robust backend technology to allow the expansion of OTT at its current pace. They’ll need to build workflows that efficiently serve content to cooperatives like Salto or Loves TV and to their own platform.
Third, Europeans love football and broadcasters are ready to move more matches online. Revenue for major football clubs in Europe increased 9% in 2018 mostly thanks to higher TV earnings.
Recently, some OTT platforms are getting in on the game. Eleven Sports owns exclusive rights for the top leagues in Spain and Italy. Amazon is even testing the waters with the licensing of a small rights package for the English Premier League. If this trend holds true in Europe as in the U.S., we can expect to see more and more sports viewing shift online.
Broadcasters should prepare for this trend by building robust OTT offerings now while experimenting with innovative advertising and other strategies to monetize sports more broadly.
Digital TV Europe’s Survey
The rest of this article summarizes highlights from the fourth annual Digital TV Europe’s Survey. Respondents to the survey included 560 industry executives from 64 countries. These executives include PayTV and OTT TV providers, broadcasters, content aggregators, and technology providers.
PayTV vs. OTT
Survey respondents overwhelmingly believe that traditional PayTV is declining and will continue to decline, with the partial exception of services that are bundled with broadband and mobile services.
The shift away from PayTV to OTT is driven by many factors, including a change in viewing habits from live to time-shifted and on-demand and from the living room television to multiple screens of different sizes.
However, the greatest appeal of OTT services is the perception that they provide greater value than traditional PayTV packages.
A large number of respondents believe that consolidation among big media companies such as Disney and Fox will enable them to compete with web- based technology giants, which they view as strongly positive.
Subscription skinny bundle offerings combining linear and on-demand OTT TV services are also highly rated, with over nine in 10 viewing these as having either very positive or strongly positive prospects.
Unsurprisingly, SVOD services are viewed as having the strongest prospects in the new digital landscape, followed by skinny bundles combining linear and VOD channels.
Finally, the survey asked respondents to choose the company they believe has made the biggest impact on the business of digital video distribution over the past year. Out of seven companies listed, Netflix secured top slot by a massive margin, with 61% voting it as having the biggest impact. Netflix’s chief rival Amazon came second, with 22% of votes, followed by Google with 9%.
OTT Live Streaming
Can live streaming replace broadcast TV? The general view of survey respondents is that it can, but it is not likely to do so in the very near future.
Respondents remain to be entirely convinced that OTT live streaming can supplant broadcast, at least in the near term. While a majority believes that OTT for live streaming is improving and could ultimately supplant broadcast when the technology is more mature, only 22% think that OTT is highly suitable for live streaming today and will soon supplant broadcast.
Respondents believe live streaming is a substitute for traditional TV rather than a complement to it.
No European service has yet risen to the top in the way Netflix has in the United States.
There are enormous opportunities for broadcasters to work together, especially in the sports market, to prevent an outside technology company like Netflix swooping in and running off with the market.